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Miller Corporation has a premium bond making semiannual payments. The bond has a
coupon rate of 12 percent, a YTM of 10 percent, and 18 years to maturity. The Modigliani
Company has a discount bond making semiannual payments. This bond has a coupon
rate of 10 percent, a YTM of 12 percent, and also has 18 years to maturity. Both bonds
have a par value of $1.000.
a. What is the price of each bond today? (Do not round Intermediate calculations and
round your answers to 2 decimal places, e.g.. 32.16.)
b. If Interest rates remain unchanged, what do you expect the price of these bonds to be
1 year from now? In 9 years? In 13 years? In 17 years? In 18 years? (Do not round
Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
